Solid sales numbers from supermarket giant Coles and hardware chain Bunnings have left rival Woolworths Limited (ASX: WOW) worse for wear as the figures show it's losing more ground to the competition.
Shares in Wooworths tumbled 0.9% to $29.54 this morning, while Coles and Bunnings owner Wesfarmers Ltd (ASX: WES) inched down 0.1% to $43.10 on a day when the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) is trading 0.4% in the red.
Wesfarmers said food and liquor sales for the three months to March jumped 5.4% over the same time last year to $7.1 billion, as like-for-like (LFL) sales which are sales from stores opened for at least a year, grew 3.8%.
While the figures were in line with market expectations and represent the slowest growth this financial year for the group, they are more impressive than they appear in light of the industry growth and inflation data that I highlighted yesterday.
Further, Bunnings is performing above my expectations with total sales growth of 12% to $2.3 billion and LFL sales increasing 9.4%.
The results don't bode well for Woolworths ahead of its quarterly report next week. Its supermarket chain has been under pressure because it has not invested enough to drive operating efficiencies and its Masters home improvement stores are taking longer than expected to turn a profit.
There isn't much to dislike in Wesfarmers' report as sales from its budget department store Kmart and office supplies outlet Officeworks were 10.9% and 9% higher in the quarter.
However, food and alcohol price deflation is getting worse with a 1% decline in prices compared to a 0.8% decline in the March quarter last year.
Lower petrol prices are also taking their toll, with a 16.6% sales drop to $1.6 billion from its Shell branded petrol stations.
But these issues are also likely to plague Woolies and shareholders have been put on alert.
